COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 09.07.1997 COM(97) 361 final

; · · , · · ·m·e~~(~,~~~ .. ~;~;6;i:~· .ll~;~:~ijfi i~~J9.7 · '••• • ',~··..-••'•-~~-·'" "'"' • .}...._ -"•·••••<~- ""' ,,;~_,,,.,..,,,., '' !_,.,v_,._,.,,~ •.. ,.,.'.l.·~L,1'~,c '••"''

(presented by the Commission)

' • ' e '

. i)e.l)lographic Re'(lo·rt t 99'7 . ~. ' ' :. .. j

Part l - Impact of demographic ch~ge on the labour market ...... : ..... 1

. . - ' -

· Part 2 -Th¢ significance oftheregional dimension, ........... , .... · .... , ... ~.,.. 12 '

Part 3 '- Demographic trends in the applicant .States ..... ; ~ .. : ............ : ...... 17 ·

Note to the reader :

All the statistics presented in this report were supplied by the. . . Statistical Office of the European Communities.

lb

· · lntnHitrdion,

Demography assumes increasing significance as slower population growth -and · ageing, · keeps ·

- tranforming at an accelarating rate the age­pyramid. The conclusion of the last rei>ort' was

. that, given present treQds, the next 30 years could see .the papulation ·aged over 60 grow by 50%, while at the same time the number of young people

· (0-19 years) and adultS (20~59 years) would fall by 11% and 6% respectively. ·

The etfects of this· marlced transition towards ·a much 9lder population are set to be felt through to the middle of the next _century. ·

· The fir~ effects of an ageing population - are ~ready being felt in the field of social protection,

. particularly on retirement pensions, but also on · health. This will . place great strain on the futon~ fundilig of social protection which is largely dependent upOn the ·contributions of the . working population. The developing trends indicate both a fall in the population. of working age · and an increase in the number of older people. As their number grow, the role of elderly people 'in society -

_is also _ going to become increasingly relevant. Demography is. thus already becoming a crucial factor which must be . taken into account :when

. modernising social protection.

Demographic change will also impact on the· characteristics of the population of working age·

' who makes up' the labour force. What will be the demographic changes in this labour force? ~t effect will these changes have . on .. the labour market? And will this demographic change require specific action? These are the questions which part 1 of this report tr'y to explore. · ·

The situation. at the EU level wiJl also have -conseq~ences for regional balances .in socio­economic ternis. This will be the focus of attention' in part . two of this· report. Will demographic change help to reduce regional ·differences or; alternatively,. will some regions . be faced · with growing imbalances? Locally, how will it be possible to bring the labour market into line with the pools of available _labour? Will the framework for action vary from one region to another? ·

1 See « The demographic situation in the European Union - 1995 », European Commission,

. Directorate General V ·

Part three of the repor:t tries to identify the major demographic trends in the 12. applicant States2

.

· This analysis will aim at providing a better understanding of the significance of demography for this group of countries which are experiencing deep-seated economic change.

Whether the subject is - social protection . employment, or structuial policy, the·_demographic variable is destined to be an essential factor in analysing . problems and · developiJ!g appropriate policy. The development of a medium to long~term

. perspective in policy-making is of vital importance · to the Union. , · -. ·

The ·Commission therefore . presents the 1997 Demographic Report as- the basis for reflection and. reaCtion by policy makers throughout the Union.-

· 2 .Malta·ha~ been included- altl.lough: for the time being, this coUntry has frozen its memberslllp application.

.·; · · ·."~ · . ·: 1\\.t{:r ·r · ·'· . ·, · · l n~t·>_:ld of ,dcni(;g;.;tphic dtar~gc on

~· thtdai).uu.r n1arlict ·· • > ~ ..... •

Demographic change and the labour market are linked in many respects, three of which deserve particular attention:

I. Demographic change modifies the internal characteristics of the · labour market. By changing the structure and the size of the pools of available labour, demography affects the baSic conditions under which the labour market operates;

2. Demographic change also influences the labour market by putting pressures on systems of social protection. Imbalances. · between the

. number of . active and non-active people not only affect the funding and organisation of social protection, but also the functioning of the labour market itself;

· 3. It is not just the population's age and gender structure which affects the active population, but also the demography of families and households. The propensity to form or dissolve

_ couples, have children, child care conditions and the living arrangements for young and the elderly, are all factors which can have an effect on whether or not people take up employment. On the other hand, the opportunities offered by the labour market influence the . ·lifecycle ' decisions of individuals and househol4s

The Commission highlighted these three types of relationship in its last report on the demographic situation, giving an initial quantitative estimate of

· the effects of an ageing population· on social protection. However, the possible impact of demographic change on the labour market is equally important. This chapter will seek to outline what are likely to be the principal . effects of demographic change in this area.

It must· also be remembered that these effects are no more than a backdrop against which other factors inevitably come Into play, such as eConomic growth and productivity. Nevertheless, within the limits of our approach, the analyses pursued here aim and providind an understanding of the impact and extent of demographic change and of the margins for manoeuvre within the various pop~ation groups.

·:::'::::.:::·::::··

/

Figure comyares the rate -of change for the · TJnirm':; ~~tal · population t0 the . rate of ::hange '>lit;\iil the ·20.:.04 age group, with reference to three :;.;-~nJrios of demographic-chnnge3

.

T:lT:!e :;onsecutive period.-: can bt identified :

~· oveY: the past 20· years; the population of ';/UT.king age has .increaser1 at a fnster rate than t~1e toml population: ·

" ove;- th~ · next 15 years, the population of work:ing age will · 3tabi1ise at a · relatively const;m( le~;e.!, while the total population will.

· 3\lh continue to g;·ow; . ,, .· xler approximately l5 years, the population of ·

v;-") ·:dng age _will start to fall significantly,_ wl:J]:;! tlle toial popaiation will slow down witi1 a !iiminishing pace. '

l::~ ;bn:::J·:, - -'f--·------· · ~~-:.::·~ '(\' p:r.~viL '3.e., pl!'l.i~tl of growth tbe : I !JO~'ri.l.!!·U~m 1'f ·uor~.diq a~1e . ~.!lhitised in around I p~Y~; il'J UD>.'nd 15 ytars time it wm start to fall.

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I '\/, · -' ' 'Aline~. A _prc~~nis fiv;: scenarios irt'r6t?L . TLc nir~~~sc.::n;iri{k~ in"qi1cst10n (Youitg: Basclin'c " .1

,;::~ld o1il~· .~~~~-5 .~ \~:~i.\1~.~r~ .s~:~~.tari;s. (~li~-~ •. ~?:~;.7:q~:~1-:_ -'·:~t.·-·:r:

Figure 1

Changes in the total population and· in the population of working age (20-64 years).

b~ index.of 100 in 1995 for three demographlc scenarios

..•. ~.: ............ .

85

110 1 Continuation of preioent trent~~> 105 t· 1ooES' ........... .

95 ._ ...... >;;./_. ... . 90 ... •·•····· ...... .

85 "'., ~ *" I I I 1 I 1 I

E. J § ~ ~ ~-- ~ ii ii _E

I ·:·· .. \

I

I ~ ~

110 r.--;Mu,~~x<.;lm;;:u;:;;l;-;a;;;qe;;<in;;-;q-;------,----.,.--_;_--c:--c '

105.

100

95

90 ·.1 85~H+~-~~~~~~~--~----~--.~~~~ ~ ~- ~ ~- ~ ~-~~ ·= =­

-.-- Total populi.tton Poi!Uatlon af ..Ur..tng age

. -. .

Source : Eurostat. observatiOits. uniil-19 9 5. 'prJ;ections'. after.that date. . . . ' '

.. {

;,\ .~: ~··.

'-. ., ,' .. .. ' . ., ., ·'·

~;\;·~<'·: / },:<.::.;:);;.~:: ::,;~.;;:; .. :~;i·}\·:~\;t}:>.·;~J~t?~f::· .. '.,, .. • ,, . --·-· '•j .... ~~~'-"o-'~'.,;:.'-'-

·.· .. <.~~~~~:.·,: 7*"::'----;,_:..--:-'-"-_,:.o._;_---.;A ~ - '~ ;;~~ii

.•

t~;t~~tr~ ~;~;tt~;;c:-;;(:-:·~::::·. ~:·:\) ?-· ... -:·::-·-:-~:-·-· .••.. ·:.:·::.::::::.::::::'·{:::: .·.::··::·:=.·:-.=--::. Within the limits of the demograr-hic approaci1. the

measurement of dependency illustrated in figure 2 can give a good idea of the tension in the sphere of social protection-arising 'rrom demographic trends, and its impact on the labour nta!·ket:

Tela! dependency l1as fallen ove1 the past 2.0 . years fpr two raisuns: Fir1;\, bab:'-i~ocm · generatic.ms joi.ned (he active ~>or.1trlati;~J:, se~;ow5 fl!rtiiity nttes have fai:II.'.n aficr !.'75;

¢ . Total riependency will sta1t co incrr:as:. :;.gain,' initially b.:x;;us~~ of smaHt>t :nfiov.;s of ,;;;crl:.ir;;~ age p::puh:.tion and later, a11er ).G' I 0, becam:e 01° .

the. retir~.r,Jent cf (ite bab:;· 'Joom u.nera;ion~.

El.derly. peof1k. growth w;LL be the !Jrincipd source of mciru r.ro:ection e;.~penri!ture inr:H!<'!'e:

• t.: E.ven if t~wre is a rt!versal cf fertility trend£, :iE

e.aviE;;gect l:y the ic:\v ageing scenLio (~·c~n,~;·:.J · .1 << c l:), t!ii.s wif.l aot..!JC sufiidem to prevent in

I rb:: lc::1g tc:r;!l, fi~e relati\•(- ir.cxeas~;. in C.c . •iq:·:ol.cir.~·.~-::·· n~tio- due to' i11e increase b ~;H~

!'lf'Jportic,;\ c.;· ddc;~. people.

r- --·---·------·--- _.. ___ _

i ll!- lu:j£1:_:_

f.'iv,u·t:O i. J:UIU5. Mea~ure of dcmogn>ph:k {.(;pcndC:ncy

Tot::! eq:endenr;' r.·~te (%) IT.a.Hc of ~·mw.g fJCU[fl.e f'a e~ffedy peor. [t:

~.c r··---- ___ , __ , .. __ ---···--·----· ····-· _, ___ _, . ~--, . . ,.

I . .

I . ; i 1 --.. ·--·-------· :

-~ f•

{!,C'

__ ,_ ,, ·-- _ _,. - ---·-I

. i I r·-

·~ I

1 I ' I -- ! -~ --~

J. i (I

1!!7[ 19!:C 2.01(: 201! ~011i 1575 2111G 7,111(" ·,

Scc:nal"im: : ;; =continuation or prcscnl trend. h = maximum ageing. c = minimum ageiag Source: /·.'un•uar. J,,,wgrapluc rn•reci"'"" /996 •• cr ... ~;nmc ;:t:OIIOIUIC implications or dcn:o~raphic trends up lc 2020", Europe~m Et.:onomv, 56 ( 1994)

3

A cioser anaiysis allows us to· estimate the impact of ch~ges to the · age-pyramid on . the active population. How have changes in the size of each . age group . influenced the growth of the active .

· populatiorijn the past and how will they influence it in the future? The results are set out in figure 3-:_

On the basis of certain hypotheses, this analysis seeks to determine the factors .leading to a change in the . size of the working population for each ·of the three decades (see model in Annex B and explanation on data sources).

This ~hange Call be broken down into two factors : ·

• .the "demography" factor, namely the variation in the population's ageisex structure and size

. alone (thus keeping the activity rates constant); • the "behaviour" factor, namely the fact that ·

·. levels of activity per age and sex chatlge in time (thus the difference between the « real » active population and the one obtained . while keeping the activity rates constant). ·

Figure 3 - EUR12 and EURIS

Respective roles of the. d~mograpbic factor and· behavioural factor in producing changes in tbe. size of tlie active population.

·- 8 Cl) t: ··o

·e 6 c ·--in 4 c 0

.(I) .... CD c. 2 Cl)

> .... (,) ca 0 (ij c. 0 ;;

-2 -:a "C ca

1985-1995 1995-2005 2005-2015

II Demographic effect o ·Behavioural effect

Sources·: l:"urostat. /996 demographic projections. !Jaseline scenan·o l:"urostat. J~ihour/•iwce Survey (HUR/21985-1995, ECR/5,after 1995) Eurostat. projectzons. of activity levels ·

A~ analysis of past data allows for the following conclusions : -

• in the Europe of Twelve4, 9.4 million people

joined the active population between 1985 and 1995, a 7% growth rate. During this same period; demographic change would have generated an iQcrease of 9.6 million if it had been the sole factor, thus 200,000 more than actually recorded. This latter figure indicates the extent of the participation decr~e in the labour market.

• als~ between -1985 and 1995, the. number of jobs rose by just 8.5 million. As the number of active adults increased more than the jobs, the difference represents the absolute increase in unemployment, that · is 900,000 more ·unemployed in 1995 than in 19855

.

The same approach has been adopted for the development of future scenarios.

Apart from the impact on emp_loyment -unemployment, the following trends in active population are likely:

• we can expect to see the active population increase by about 6.9 million by the year 2005, representing a lower rate of growth than during the preceding period. Demographic change will contribute less to this increase, 50% of which will be due to increased partici~ation in the_ labour market;

• over- the following I 0 years - 2005 to 2015 -­the active population .could fall by as 'much as 2.15 million. An expected demographic fall of 3 .4 million people will be partly offset by an extra 1.25 million people participating in the labour market. ·

Migra~ory (l{>ws could play :.a significant rote· in _ shaping · ihc· future trends· of ~Qrking ·age ; poptW:i_til).ri''._ In tile past<accadcii\thcy haye

nmtritiritcd .to son it ·extent !O incrcasi"ng the size . : ... -.::.:· ' .

.. . <::~~~~~ . l ····-~·~ --;-- -··

paia or;: lire ;u.:ti~\~· population of EUR 15 arc only <iv3,ilable froJU 1995 Between •1985 and 1995, 'peak years for unemployment. the total number o(um:mployed people grew from around 15 million to 16.8 million whereby about 900 000 are to be attributed to the new L:mders which in this simulation arc not taken into account. Sec Eurostat scenarios in Anncxe A.

and reducing the pace of ageing of the working age population.

In brief :

• Demographic change bas placed additional pressure on the labour market over tbe past 10 years because of a sharp increase in the labour supply. Together with the growth in female participation the result was an

"'increase in tbe active population.

• Even if participation in the labour market increases, we will soon see a reduction in tensions· in tbe labour market due to the demographic fall;

• Changes . i:it the levels of participation will play a greater role in the future growth of tbe labour force.-

• Economic performance,. productivity growth and future migratory trends will also play a potentially important role.

5

In the above, trends in the population of working age ancl the · active population were seen to be closely linked. But what is the situation within this population?

Figure 4 shows that it is going to experience some major changes in age structure :

o · A .distinctive feature of the past 20 years has been the· entry of all the baby-boom generations to the population of working age.'- This produced a major increase in· all age groups, especially the intermediate 30-49 age group;

·" ·In contrast to this. the next 20· years will see considerable imbalances in the contribution of the various age groups. The 20-29 age group. a grcup which replenishes the population o( working age, ·. will fall by 11 million,. the intennetEate group will remain at its present size, and the oldest group (50-64 years) will increase by 16.5 mimon, which is over 25%.

In brief:

Within· the populalioa of workirg age, the distinctive feafure of :he next 20 years will be a very ~eipnd grO.wth between the different age gnnlps, breildng the balance of the :pllst 20. years.

Figure 4- EUR15 ·.·Increase in c~rtain age groups between 1975-1995 and 1995-2015

.. 30%

25%

20%

15%

10%

·-.-···-·------·-··------·-----------·---,-------

5% -j-.!,......,.....,...J, ... ,.j-----------j

0% -1---,----l--=~ ....

-5°/o -1----~

-1 0"/o _J_____:----'-'---

. -15% -1--­

·20% L, _ _:==:~~•

Ill ·the past: 1975 - 1995

·a the Juture: 1995 - 2015

Source: Eurostat, obsen:ations unti/1995, projections after that date. Baseline scenan·o

6

A further analysis is needed as the ageing indieatcrs highlight two rupt:me poi.nts.

Th.~ size of the expected fall ii:1 tlt<! nurnber of peopie aged between 20 and 29 ccu.piea. v.-~tli ti1e increase in those aged between 50 and E4 wiii result in a marked ageing of the available pooi of labour. ·

The change in the average age of the populaticn agcd.betw~.oefl 20 and M, as ilLustrated in figure 5. is art initial indication of this changing trend.

o This average age scarcely changed during the years 1975-1995, when it remained just over 40 years;

I

e Since 1995 it has been a marked tendency for the average age to increase, as a comparison of the cwves' · g:1'.dient fer the two t~eriods dearly Ulustrates;

c· After having rer:nained. stable for lhc ('ast 20 ye;;rs, the average a.ge wiLl increase by 2.5 years on averr.ge by the 2015, a considerable increase.

1,. , .. ,. • f r Lrl iiJ:I:'TC::

I . i Stt~Kh11g irn 1995, Mdi co~tlur:tdl!l:fE I!Jeyml'~ 2€H5, tire Ei.VIl!H'Il!ge age af the wm,killig &ge po!Jui~ermt wfH ~~WW ~ cm:u:rOieii"Wfe ll!ll!d' CG!!!!:fiJmt inCnCWle.

Source : Eurostat, observations until 1995, proJections after that date. Baseline sce11ario

7

··I 2010, second rupture point

The second point relates to the relative share of those expected to join the active population for the first time, i.e. the 20-29 age group, compared to those who are dose to leaving it. i.e. the 55-64 age group. Fi~e 6 shows that: · • The share of the. 20-29 age group has been

constantly falling since the early 1990s, while around the year 2000 the share of the oldest group will start to rise;

o In . 20 10 the two groups will be level pegging, each representing ~me fifth of the population of working age;

.,. After this date. the oldest group in the active population will account for a progressively larger share of the active population than the 20-29 age group.· At the same time, the poptilation of working age as a whole will start to fall.

fu brief

a From the year 2lHO mnvards, older wot:kers wiU . accm:~nt for a greate1· share of 1~1~

popuhttion c)f workin~. !lge thnn .ymmgu W3:-kers ~bose · share wiU prognssive!y decnaae.

e The intermediate group (30-54 years) will first increase, then..stabilise and later begin

• to_ fall due to th~ knock-on effect. uf these cbange3.

Figure fi -· EUR15 Respective shares of the 20-29 and 55-64 age groups in the working age population (20-64 years).

28% ·,-----------------~--------------------------~~ 27%

28%

·25%

·24%.

23%.

22%.

21% 20% ....

19%. -.. -...

............................... . .

·-··········--······ .... -3.1- --···············~·-··"'····················· 18% ............................ ! ................... : .. ,_,_. ____ ., .•.• ~······· ·-···"·"······-~------ .................. .

Source : Eurostat, observations until 1995, projections after that date.'Base/ine scenario

8 .

In the past, the renewal of the population :of working age, i.e. i:he ability to replace generations leaving tbe labour market by those coming in to jotn it, has served to:

o supply tbe highest growtb sector£; c: contribute to the system's productivity by virtue

(I ~he fact tbat young peopte have lower cost/productivity ratio :

e make a contribution of new sl.dlls and flexibility in all sectors.

It is interesting to illustrate this renewal by means · oftwo additional indicators. The first estimates the

balance between incoming and outgoing flows (figure 7-a). Tlus gives us a good idea of the change in the size of the population of working age. The second, more qualil:ative, ·indicator examines the ratio between numbers joining and leaving the la~our market (figure 7-b): this is essentially a replacement indicator.

• In terms of balances, tbe decrease which began in 1990 will result in more departures than entries by around 2009.

• In terms of ratios. the replacement rate will fall by 35% over 20 years: in 1995 there were 140 entries for 100 departures: by 2015 there will be

90 entries for 100 departures, and thus a net deficit

. . ....

r. J)~ogre£!h'ery, tbere wilE he le&£ scope to adjui:t the Ia~our- marf?;et: ~y mean~ of tbz flow! of e~L~ries ·and departw.·e~ ;

i e Demogravhic chaage win ~roooce megatn~£ renew&i . P!abm~ fOil" tbe ~opula('im:;, of working ~ge. The possibiKttie! of skm reoewru d:ue solcly to the entry of you~mg

_1 people wifi be limited.

Figu>e 7 - EUIUS

7-a : Differences between incoming and outgoing flows for the population of working age

1.500.000

1.000.000 .... . ..... ······· .

500.000 ....................... .

-500.000 .L_ ___________ __,

7-b : Number! joining the population of working · age for every 100 leaving

160

"' Ill ... :I t:: ~ 120 Ill

"CI Cl 100 Cl ... ... 80 Ill Q. Ill Ill 60 ~ Ill 40 -0 ... Ill 20 .Q E :I 0 z

1975 1995 2015

Source : Eurostat, observations until 1995, projections after that date: Baseline scenario.

9

Is it possible to determine in more detail how demographic change ·is going to effect the active population? Some interesting findings are obtained by distinguishing by sex and age:: group; between the effects of demographic change and behavioural change on the size of the active population:_

'The differences between· generations, and especially between the sexes, are clearly marked:

• The increase in the total size of the active population recorded between 1985 and 1995 is unequally distributed b_etween the ~xes, while . the demographic c~ntribution. which is similar between the sexes. is not. the. same· for all age groups:

• BetWeeQ i 985 arid 1995. entry . to the labour market fell by 200,000. This fall is principally attributed to the ·decline for men, and young

.men in particUlar. Employment among all young people aged between 20 and 29. regardless of sex, fell during this period.- This could in part result from the prof!ounced demographic contribution of the . preceding generations, which may have blocked their' access to the' iabour-market, as well as from the long-term tre~d for increased participation in · education · and training · of the_ younger generations:

• There has been a sharp increase· in employment :among women over 30 during this period. In the intermediate group (30-49 years). more

· thim 50% of the increase active women recorded between 1985 and 1995 is due to the increased participation of women in the labour market

• Among older ·women workers~ participation . behaviour was responsible for virtually. the

entire increase in activity:

• The demographic contribution among the youngest workers has started to fail and.- after

· 2005. it will only be the oldest workers who · will bring any increase due to- demographic

change:

• In terms of behaviour, and still on the basis of the hypotheses for changes to the active ·

. population, female participation will- continue ·to increase, even ·among younger generations. _By contrast, between 2005 and 2010. there will

. be reduced male participation in all age groups.

In brief:

o The separation between the behavioural . effect aucl de~nograpbic effect reveals the change in the size o{ reserves in the labour stlpply procfueeil by d~()grapbic effects;

• Among young people hi particular, it w_ill cease to be possible to Offset the demographic fall by increaSed p~rticipation; .

• Apart from the potential:- offered by .occupational and. geographical mobility, women constitute tbe main resource for employment . groWth, especially · young women, who . when they· grow older, will bring a higher participation and employment _rate. ·

Figure 8- EUR 12 and EUR15 Respective roles of the demographic factor and the behavioural factor in producing

changes 'in the size of the active population, per age group and gender, for three periods. . . .

0 ____ ,___ l!i!ll!!r --2

.. ---·----··

Dem eli. - 800 000

!Act. pop-:-: · -::-;·ooo oool

__ ._ ___ Bah. ell. - 200000 _.,

..t) •..

Act-pop.: -3'000000 li\Ct.:;,<;;;:

_.:Demel!.· Beh. ell.

Dem·ell. - .360000 l.leh ell. -2 640 000

----- .. --------:

,~3:0':~ ·r------- 350000

198&;1995 '1995~2005

[J ·Behavioural effect

1 M;,;~-3o.i9~y~a;~]

'10 ----- ---·-·------ ---·· .. --

.:8 po:~--+:~=~ I ell. - 700000

6

4 !Act pop · +3 600 000 I . Dem ell +3·500 000 Beh ell + 100 000 .

-- ---·· ----

2

0

-2

-4 .1985-1995 '1995-2005

,-;;.~s so.;4·y~ars'J

·10

:a o:: 0 " 0 0 ,;

6 0

0

" ·~ ,, ' N

t: 4 ..

.t.

2

0

2 I""' '~'P Ut~m t>lt

ll<•h ~~~

-4

'

\

Act pop. .' .' oOO 000 l )("lfl ~" f -~ soo 000 B~h ~~~ • 100 000

·1 ()(XlOlKl I I ;,()QQ(l()

- 1 ~..00 000

. 1985-1995 1995-2005

2()()5.:2015

\

Act pop· .. ~ 900 000 i . Dem ell +3 100 000 ;

\ Beh. ell - 200 000

2005-2015

~-Females 20-29 years ;I 2.------------------------------, 0

+ 300 000 1-----,J

-10 -1 400000 - 650000

ell. - 750.000 ~~--------------~

1985-1995 !1995-,2005 2()()5.:2015.

.re-~~les'3049 years~~ 10.-------------------.

6

4

2

0

-2

-4 '1985-1995 1995-2005 2005-2015

~F;;~Ies 50-64 years ·J 10 . - ·-----------------,

8 -- ......... -----~.---- ----

6

4

2

0 .1-U~--L.;;;..,I--r--

I Act pop • 1 300 000 l

-2 ll••m ell + 100 000 H~h eff. • 1 200 000

-4

1985-1995 1995-2005 2005-2015

. \.. ID bJS

: ~Lt~ ~ : ~:: =-~ /= ~\=/ ~~~ ~=~-~ == - -= -==::-:·:=:·~====.: =-=·= : :_: :.: ::= =:= ~=~ ::: : ======= =-· = ·:· :: .:. : :::: ~ <: = ===} :·:·: /;_;;;_; ;.~.: = :) ===-~-=-~ ==== ~ f:~ ~:U:~ ~ : ~ : : .:. =.:.~ ~ === -~~~ ==~ ·;: ~~~->~ :·:=: :·: ::: ===== .:-= : ~-; ~=~ ~-~ ~ :;~ ::\~.Y =·= = ; :=: : -:(;: r.~ : :::·;T :_: ... }'J:n .... ; .. :·::1·:.:::::•::: :;n:~ .. ~I!~~J.' .... 1_ .• _._ .. : .. ••···::•:¥:t~'=gt:~~~r::ii::'\ii::: \ ··················.-......... :·•· •:.::: .... ·····

:- :: :<=: :=:-:: :: :·· :_: ~ ~-:-~:: ~-~== ::: : :·:: :': :; ~: ~: ~-~ ~ ~-~ .. -.- ... :': :.:-: :=:·:::::: :':'. -· :': :=:=:·:: : :: :: :·: ··::::: :'; :_:-: :-:< :::::: ;:; ::: :-·-::: :·:·:·::: :-:.: ;:: :: ~/-! :.:.;.:.;... . ... -.- . ,·, . ,·, ..... .

CONCLl 'SION ..

. The anaJysis of _changes in . the pojmla:tion of working age .reveals-the extent to which future economic growth Will . be dependent on quantitative and qualitative changes in the labOur force.

· The stabilisation and then faJI in the size of the population of working age could prove a favourable

· factor in reducing imbaJances between labour . supply and labOur demand. However, it will aJso be necessary to deal with a considerable increase in the pressure of .ageing on sociaJ protection, ,

.. especiaJiy for pay-as-you-go pension systems. Keeping 'older workers in employment for longer

. could be, in certclin sectors, a key ele!Jlent for at least partiaJiy countering this problem.

·. Howe\te~. keeping older workers in employment for more years will add to a second concern- linked to . the demography of the labour force: • its internaJ ageing. Thu5._ :adaptability to labour demand

· · chl'lnges will have to be obtained more from resourceS aJready . in . the labour: force rather than

from new cohorts joining the labour market. Active measures such as re-quaJification. life long · learning, measures to ensure employability will be required in ,order to adapt skills and ensure. · economic competitiveness.

Stronger economic ·growth is becoining a fundainentaJ factor in supporting sociaJ protection. provided this growth translates into an increase in jobs and increased recourse to existing pools of labour. ·For women in particular. this recourse is subject to certain constraints. An_ innovative approach will be' necessary, including· measures to promote access to · the traditiollal employment

. market (reconciliation of work and family life). the absorption of . hitherto exclusively voluntary activities by the market economy (community actions, responsibility for family care through tax incentives, etc.), ana more flexible work organisation. All types of mobility will· pl~y a greater role during the years to come.

7 See, among others. «·The new role of women- Family formation in Modern Societies» edited by Hans­Peter Blossfeld .. SociaJ inequality series, Westview Press, 1994 or« Fani.illes, travail et politiques familiaJes en Europe». L. Hantrais and M-T. Letablier, Cahier du Ceri~re d'EtUdes de I'Emploi. PUF, 1996

,. . ' I

11

P.\RI" 2 Tht• :-;igniticann· of t~te n·gional

dimcnsimn

The previous chapter showed that there · are important liDks between demographic change and

· the labour market. However, the aggregate approach often fails to provide the most effective means of examining these linkS. Among other things, it is not suitable for understanding the widely differing trends at regional level.

The strongly diverging situations found among regions suggest that the impact of demographic change could be open to different interpretations than that provid~d by th~ agg_regate approach.

This · is confirmed by the regional analysis presented in this section.

The Union's regional diversity can be illustrated with reference to many criteria. Among the most visible aspects is the uneven population distribution, with a large share of rhe popuiation concentrated in a comparatively ·small part· of the · territory. Possible population change, as illustrated on Map 1, is also of particular interest. Among other things, it helps to highlight differences in future demographic patterns between regions.

· This is particularly interesting because, ~ shown in chapter one, a stage characterised by a constant and balanced demographic increase in the population of working age is now giving way to one of "demographic neutrality", soon to be followed by one of negative growth.

Map I shows the growth index for each region compared to its population in 1995' On the basis of their stage of demographic growth, regions can be ,grouped under three headings:

• Regions which have already reached the negative growth stage, such as the former East Germany, Saarland and pan . of Westphalia. · northern Italy, Asturias and Aragon in Spain, and Lorraine in France;

• The vast majority of the regions are likely to go towards a period of demographic .neutrality between 1995 and 2015:

• Finally, sustained growth is found in about one­fifth of the regions, located in a . greater urban districts and in the south of Spain .. France. , Italy, Germany, the United Kingdom. Belgium and Greece. · . .

In brief:· .

• :Most of the Union c:ountries show an u~even regional pattern . of future . demographic 'nnrth· g '

• . The same country can preSent a variety of situations in· terms of .demographic dynamism;

• Regions with similar characteristiCs tend to • fofoi a·Ciiister witb·neigbbouring re~ons.

12

.--------------. ---------------------~--------------------------------------~~

EUR-15 NUTS l (UK : NUTS 0)

(AU. FI.SK: NUTS 0)

Base 100::: 1995

0 <97.5

~- 97.5 to 102.5

. . • 102.5 to 1 ro' . ~~ >-IJO.

PopUlation growth· betWeen 1995 and 2015

; .• ..

.....

-·:Map 1..

•. •J•1 .. :'b ... \·. ' <:;, ..... ,, ,'I J , '.' ·' ; ':· :·:.'

Although there is a marked difference between the regions in terms ~f the stage of population gro\lth they have reached. ageing is a phenomenon common to _all of them. Since 1995, the proportion of people aged over 65 has been increasing in all areas. The results of this growth of the older popuiation arc presented on Maps 2a and ib which illustrate the proportion of people aged over 65 as part of the total population.

By 2015 the following developments are likely:

• As expected. the rate of ageing and, above alL the current· population structures vary from one region to another;

• The proportion of elderly people will be particularly high in northern and central Italy

· where they will account for a qumter of the population;

• To a lesser degree. there will also be a preponde~ance of elderly people in nmthem Spain and. in a more dispersed way, in northern· and eastern Germany, Greece and some central regions of France;

• The regions which will still have a relatively younger population will be more limited -in number arid more localised. The areas in question . are southern. Spain ~d central Portugal.,,)~Ireland, .. Apulia <irtct Campania in southern I@y, northern France and Flevoland. The Easr,Midlands in the U~ted Kingdom and Alsace ai&{more isolated pockl!ts. . ··

~ ~ ·' ~-"'"'~ -~<i' ·~ -~

. :·•-.::~- -..:~

In brie!:

e Although apparent everywhere, population ageing will occur at varying rate!l and degrees, affecting . ·il'opulations with very different:initial age structures. The t'estdt in 20 yea~ time will: be; a Weater diversftv Gf age structure in ilie regiaos. ·

0 A.geine . doos . not nccessruily reslllt in a: population d~rease. In 2015 signf11{;:rnt population increases wm be coupled \7itb a q11ih~: ofd pop&rlation strnc(urf.

• Tile. conili[mt!iGn of & can.~idei'all~e fail irt flopn£8t1on and lL muc:.h o[ner· (10f1u~auarr:, ar i'ocnd in nortben1 Italy ~n;d Sr;,aln:, rnd iu the former East Germany,. mggc.:st~: signiricz.nt I demographic decline.

• As mcniim:.~d in:. c.Iur~ter Ic (fu:. klttun; ttrospec(s are alw poterttlafky fliflm::.rrc(,rc !'iiv economic perf<>nnance ::md mr:;ratm.)· flaw~ at regiorr.l!l ieve[. ---------------

13

. J. I I I

I i

i

Map2~

Proportion of ears and over as' art of total opulation in 1995

r:nrrs 2 (UK : NUTS I)

. ( AU, Fl et SE : NUTS 8)

1995

0 <16%,

~ l6to 18%

IIJI•s to 20%

.• >20% .f '2-~·;.-=.-.~r·

~:: /~--

..

Eurostat, Demographic projections, 1996 - Medium scenario

··;:,

. .....

.. , .. If(<:,:"-;.. i1 .. •• ... >I • ..... v

t• ·~'

13

Map2 b

Proportion of people aged 65 years and over as part of total population in 2015

NL'TS 2 (11K: NUfS 1) · .

(AU, Fl ct S! : Nt.rfS 8)

2015

0 <16%

I~ I. ,.

I

16 to 18%

18 to 20%

>20%

' '

Eurostat, Demographic projections, 1996- Medium seeoario

_ .... ·~--

r .• :.· ..... ·

It has been seen that older population will grow · substantially in most European regions over the next decades. This becomes a major concern since- _ the population which must bear-this extra cOst is simultaneously shrinking. Map 3 -gives, at regional level, the year -'when- the active population is exspected to start to fall for demographic reasons. In other words, it shows the dates when the net demographic contribution to the active population will cease. The methodological basis used is the same as for the global- analysis in part on~ (see Annex B).

• Sev_eral geographical areas,. incluping the ~hole of southern Germany,· France, Italy_ and the United Kingdom, will find ~at over the next 2 decades natural demographiC change _will de.;>ress the numbers in the labour force.

-• Three major geographically compact areas will find themselves in exactly the opJ)osite situation with a substantial reduction of the potential labour supply by the end of the- century. The

-regions in question are the ~hole of Italy lying ·north of Molise; all areas of northern Spain lying between Catalonia -and Gaiicia, the far· north of Germany, North~Rhine Westphalia, Saarland, Lorraine and Flanders.

• The analysis of the year in which a decrease of · the active population, for d~mographic reasons.

will-start shows two separate peaks. On the one hand, many regions will experience a reversal of trends before or shortly iller the turn of the century. On the other hand, many regions will experience this after 2010. Very few regions will see trends reverse. during the period 2000-2010.

·-

lin brief:

• There is a ten-yeair difference between tbe regitms in terms of tbe reduction. of the pOtentiaUabour ~pply.

. ·' .·

• Several' groups. • of regions have . already experieneed a • decrease in tbe demographic: contributio1r to tbe active population. This increases the risk. of a lab(ijlr shortage in eei'taio a~as. ·

14

·Year in which the active age popUlation will start to fall due to demographic _reasons

EUR-15 NUTS l (UK : NUl'S l)

(AU, l't et SE: NUl'S 0)

Year of occurrence , 0 between 1995 and 1999

flj between 2000 and 2004

II between 2005 and 2009

• between 2010 and l014

fH n()t before 2015 ~

' _, ·.•.

~s.

t:--~~-~ ·....,.-'.'' -~~:·

Eurostat, Demographic projections, 1996 -Medium scenario -

"j r- ~-···. ··~ ..... . : •••

. -~""· \, ~-'·-··

,_ ... --~·--···.

-- ..

. ___ ...... , .

. ·· ,. -.. ·-·--.... .. :

-:-·-.............. ~"-:.- .,_

· .. ,

Map3

Another aspect of ageing has implications for the · laboUr market, namely the ageing of potential labour forces. In this section, estimates are based on the population aged between 15 and 64 years, as these are the only age groups for which the statistics used are available.

Map 4 shows the rate of ageing, with a growth ·index for the 50-64 age group as part of the total population of working age ranging from \I 05% to 160% between 1995 and 2015:

• . The French, Dutch, Belgi~ and Irish regions show a very high rate of ageing within the population of working age.

• Regions , with an initially elderly population (Germany, northern ·Italy) show a more moderate ageing of the active population.

• Irrespective of the rate of ageing, the analysis of .the age structure of active persons (share of over 45s within 15-64 age gioup) shows that it is in the Gennan regions that the jxlpulation of working age is likely to be the oldest in the Union in 20 years time. More than 40% of the­over 45s in the 15-64 age group will be found in these regions.

• In neirly all the other regions, the 45-64 age group will represent mote than a third of the population of working age.

• A lower proportion of.25% will.only be found in four isolated areas in 2015: southern Spain, Ireland, Brittany, Nord-Pas-de-Calais and half of the Benel"'x regions.

1m brief (

o · Combined with the falll in tbe demographic ' cOntribution, tlhe' . geweral ageing of tbe >population of working· age amplifies the regional:. significaiice-of this phenomenon _for the ~abour market. · , ·

• Germany and Italy generally sh~w- a· morr pronounced ageing of the population of working age. ·

• -With the exception of certain isolated areas, this phenomeoon also affects, with a different timing, all Europe's regions:

15

·Map4

Growth in the population aged between 50 and 64 yean between 1995 and 2015

EUR-15 NUTSl

· ( AU, Plet SE : NtrfS 0)

Base 100 = 1995 . .

0< 107.5

~ 107.5 to 125 .. ~-,

. I • 125 to 142:5

i .> 142.5

l I I I

r

I

Eurostat, Demographic projections, 1996 - Medium scenario . .

-· --·:

..............

.,.,.---:.-

--~ , ... ·.

·. ·-·-···

--~·-.

Three underlying trends relating to demographic effects have been identified :

l. The. major difference between the regional picture and national situation; 2. The polarisation of certain demogr:aphic and economic trends with implications for the convergence

·process: 3. The potential 'demographic imbalances w~ich could Wldermine the functiorung of the labour market due

to a labour shortage, ,.

While there are various uncertainties concerning any scenarios for future· demographic patterns in the regions, it seems likely that the Union will face new challenges in this regard in the .next century. National arid Union policies will have ·to ensure that labour resources are optimally used in regions where there are scarce. while seeking to ensure that new job opportunities are created where they are in surplus and w.here Wlemployment is persistently high. While some geographical mobility of labotir is inevitable in a .market economy, the main challenge for· 'the future is to ensure · the occupational mobility of the workforce in a · c<intext of rapid technologic~ change by providing necessary skills. · -~ ·

--~--~--~~--------~~----------~-------------16

- PART3 -_ Demogt·aphic trends in the applicant States _

Union enlargement is one of the major milestones on the road to European integration. Over the next years at least some of the 12 present applicant· States. could find their place within the European Union (sec ·footnote in introduction concerning Malta).

It is therefore only fitting to complete our outline of the principal demographic challenges facing the Union with a brief review of the demographic future which awaits these countries.

The aim here is not to undertake a detailed analysis but rather to - identify points on which these countries converge or diverge, both with respect to one another and to the present EU countries,- in terms of the . challenges which their respective demographic development could generate.

What is the demographic picture of these countries in economic transition? An initial indicator. given _ in figure 9. measures the population growth index between 1995 and 2015. An almost general lack of growth is observed: • Whereas between 1995 and 2015 the Union is

going to see a population increase despite the / demographic slowdown. this will hold true- for just four· of the candidate States : Poland and the Slovak Republic, Cyprus and Malta.

• If Cyprus and Malta, whose small population renders the increase incomparable with the others, are excluded all the applicant countries will have demographic growth inferior to that of the Unio~.

·. Figure 9 -Applicant States Total population growtb between 1995 and 2015

- (base 100 in 1995) ·

- Sources·_. llnited Natiom. Worlcl Populatio11 Prospect 1996 (applic~nt States) - Eurostat, Demographic Projections I 996, Hclsl'lillt' sn·nm'io (Fl IU /5)

What will be the implications of demographic change for the labour market in the applicant States? As in the case of the previous analyses. the principal conclusions can be ~rawn from two indicators: dependency rates and the growth of the

population of working age. The results. presented in figure 10, allow for the following conclusions :

• Some of those countries set to e:-.:perience a fall in total population over the neXt 20 years will

17

also · experience a significant fali in the population of working age over this· same · .period. .

• Poland and· the Slovak Republic will see the population of working age grow at a faster rate than the total-population. .

• Dependency ratios provide a more detailed view of the differences between countries in terms of demographic· ageing. The dependence of older

{ .

people in all the ~pplicant States is lower th3n in the Union. Five of them neve-rtheless have a higher proportion of .older people than young people,_ with relatively high dependency rates (Estonia,. Hungary, Slovenia, Bulgaria and the Czech Republjc).

• Polan~ and t,he Slovak Republic are worthy of particular note among the countries with a younger population structure.

. . Figure 10 - Applicant States Development indicators for the population of working age (15-64 years) between 1995 and 2015

lOa- Growth index for the population of working age (base 100 in 1995) ·

1~r---------------------------------------------------------------~

~ ·!! -~ .!!! .c .!!! .!!! c ~ ci. c c

3' "' 0 Gl Gl "' "' !J.I Ui ·> (jlr E :::1 :::1 ·0 .s:; ID w ii5 ·o

"" a: ..J

lOb- De~nden£Y rates.in 2015

de=dep. !l elderly (65+/15-64); ~-of young (().14115-64); dl=tolal dep. (de+dy)

50%~--------------------~--~~----~--~

40%

30%

20%

1

1 i .20:: (/)

In -o "' it: c ... -~ "' :J :::E

a.. w

r ·'

-I· 0,71 o;9 1,06 I- ~~~--- _-_:r::.::... .. :.-:t·.:_~~ :::±:::...:..'==L~~~:-=~L=:r::=:c:::=:ic::E~:t=~~

... Ill ~ ci. [ 0 Gl (ijlr >-u

, Sources : C lnited.Nations World Population Prospect I 996 (applicant States) - Eurostat, Demographic Projecti~ns I 996, · · Baseline_.,cenario.(EUR/5) . · · ·

18

The observed slower demographic growth for most of the Eastern European· States is explained by the low fertility rates, the high mortality and the important migratory o~tflows. observed over the last years. Total fertility rates have declined

. substantially over the last decade bringing some of these States to levels lying below EU.average,

. However, the demographic ageing is not so advanced in these States because of their relatively higher mortality patterns. · These patterns refer to children under one year of age (high infant mortality rates), and the mo~ elderly members of the population.

Figure 1_1-plots each country with reference to tWo . variables which, generally speaking, serve as a development indicator. • Leaving aside atypical cases such as Malta and

Cyprus, with a very different history of social and economic development than the I 0 other applicant States, major efforts are . needed in order to reduce this mortalitY.

• Slovenia and the Czech Republic seem to have made progress · in this respect, with infant mortality rates of below IO·per 1000 .

• Romania has very high infant mortality rates and a quite low life expectancy. Together with_.. the Baltic States and Hungary, it has achieved the poorest performance in tenns of . life expectancy.

Figure 11 - Applicant States Infant mortality·and life expectancy at birth in 1995

25

c;20 0 0 .... ... .G)

.9:15

-~· ~ ~ 10 ... c

~ 5

0

. '

·• Romania

Latvia . 'Bulgaria

• 1--Hungary I • t

Poland

• 1· • • Lithuania Estonia Slovak R.

I • Czech R. Slovenia

•

!

68 69 70 71 ' .72 73 74 75

Malta

:I Cyprus -.

EUR1&-

I. 76 77 78

· Life expectancy

.. Sources: United Nations World Population Prospedt 1996 ·(applicant States) - Eurostat, Demographic Statistics,/99 7 . . 'EURJ5) . . . . . .

~ - Conclusion . .

Although it will come later and . to. a lesser degree, population ageing will also affect Eastern European countries. In half of these States demographic trends have already opened the door to increased pressure on the social protection system which even now is experiencing difikulties. ·

These States arc also going to experien'cc a sometimes significant fall ·in· the population of working age. heralding problems of a simil:ir n:Hure to those with which European Uriion will be faced after 20 10 .. A future of sust:uncd growth would require the activation of the existing labour force reserves. Developments in Po,land

·and till' Slodk.- Rcpuhli0 might he somehow. ditTcrcnt. Sustained economic gro\\th and .job .creat.ion will be ll'lJIIIIl'tl Till· gulf hl·tw,·di the ~iti~:s and !he ~ountryside may pose a special challenge in .these.States.

These States will also be confronted with other challenges. in particular in the area of health. in order to unprovc their high monality rates.

19.

ANNEXE-

. A. SCENARIOS FOR THE FUTURE DEVELOPMENT OF THE EU POPULATION (1995~2015)

A verage num er o Cl b f h'ld ren per woman · 1995 '2000 2005 2010 2015

High 1.50 1.75 1.87 . ' 1.91 1.92. Low '1.42. 1.40 1.40' 1.40 - 1.41

Baseline 1.45 1.55. ·1.60 ' 1.63 1.64 Old 1.42 1.40 1.40. 1.40 1.41

Young 1.50 . ·1.75 1~87 1.91 1.92

.-. Life expectancy at birth (Men) 1995 2000: 2005 . 2010 2015

High 74.3 75.5 . 76.9 78.1 79.2.

' Low 73.5 73.9 74.3 74.7 75.0. .. Baseline 73.9' 74.7 75:6 76.4 - 77.2

Old . 74.3 75.5 76.9 78.1 . 79.2 ·Young 73.5 73.9. 74.3 74.7 75.0

LifeJexpectancy at birth (Women) 1995 2000 2005 2010 2015

High 80.7 81.7 82.7 - 83.7 84.4 -Low 80.1 80.5 80.9 81.3 81.5-

Baseline - - 80.4 81.1 81.9 - 82.5 83.1 Old 80;7 . 81.7 82:7 83.7 '' 84:4

·voung 80.1 80.5 '• 80.9 . 81.3 81.5

_, ·• Annual migration balance (in thousands) . .

1995-1999 2000-2004 2005-2009 . 2010-2014 High - 934· 977 840 788 .Low 527 391 388 396 -

·Baseline 719 654 605 592 Old -527 39.1 388 396

Young 934 977 840 788 .,

,.

8. METHOD OF CALCULATING THE DEMOGRAPIDC AND BEHAVIOURAL EFFECT

(ACTIVITY RATE EFFECT) IN CHANGES IN THE ACTIVE POPULATION

On the basis of the population aged between 15 and 64 per year of age and per gender in 1995, and demographic projections for the population aged between 15 and 64 per year of age and gender up to 2015, for each gender we have, ·

for ; P, P;,, O'i,t

and·for ar;,, AP;,, AP,

-

population aged between 15 and 64 in year t population of ~ge i in year t (i ranging from 15 to 64 years) percentage of age i complement in 15-64 age group complement' in. y~ t, the vector (c:r1s, c:r64),defining the structure per age in year t, so that

P;,1 I P, = c:r;,, with 1: c:r; = l· for year t activity rate for year of age i in year t active popul~tion of age i in year t total active pqpulation (15 to 64 years) in year t

the followj.ng relations:

AP;,, ar;,, x P;,, ·= ar;,, x c:r;,, x P,

APt = 1:; (ar i.t x c:r;,, x P,)

and the variation in the active population between two different dates as follows:

MP ·1:;. (ar; x c:r; x .1P) + 1:; (ar; x .1c:r; x P) + 1:; (.1ar;_ x c:r; x P) + s.

demographic e~ect .. . · activity rate ~ffect residue

· that is the sum of the two effects:

• an ·activity rate.effect, expressed by the variation ·in the active population with a ~onstant 15-64 age group complement and constant age structure; . this expresses the degree of participation -in· · employment of a given complement;

• a demographic effect,· expressed by the. ·variation in the active population wil4 a· constant activity rate per year of age and constant age stRJcture; this demographic effect combines an effect linked to the complement and an effect linked to its age composition. . ' .

As the me! hod was applied to ~ach of .the Union countries. the residual factor E linked to the discrete nature l)fthe time series has never exceeded 2.5% of the total variation. It was ignored in the analysis of results.

ISSN 0254-1475

COM(97) 361 fincil

DOCUMEN.TS. ·

EN 04 05 16 ..

Catalogue number CB-C0-97-361-EN-C

Office for Official Publications of the European Communities

L-2985 Luxeinboirrg

ISBN 92-78-22719-6